Interactive Brokers to halt options market making activities

The move will affect Interactive Brokers’ operations across the globe.

Electronic trading firm Interactive Brokers Group, Inc. (NASDAQ:IBKR) has announced its plans to put an end to its options market making activities globally.

The operations, which are conducted through the Timber Hill companies, are expected to be phased out over the coming months. The broker will continue carrying out certain trading activities in stocks and related instruments.

In a press release, Thomas Peterffy, Chairman and CEO, explained that “Today retail order-flow is purchased by large order internalizers and joining them would represent a conflict we do not wish to have. On the other hand, providing liquidity to sophisticated, professional synthesizers of short-term fundamental, technical and big data is not a profitable activity”.

In addition, Interactive Brokers’ management is conducting a review of the facilities and staffing, with the review set to be completed in the near future. The goal, as the broker put it, is “optimizing the deployment of the Company’s resources”.

Along with this shift toward electronic brokerage, Interactive Brokers said it planned to rebalance the composition of currencies in the GLOBAL, a basket of 15 major currencies in which it holds its equity, by increasing the relative weight of the US dollar vs. the other currencies to approximately 70% from the current weight of about 47%. The new composition is set to become effective at the close of business on March 31, 2017, whereas the conversion to the new targeted currency holdings will happen soon after that.

This is the first major reshuffle of IB’s product offering for quite some time. In December 2014, the Australian Securities and Investments Commission (ASIC) announced that Interactive Brokers will refund AUD 1.5 million to Australian retail margin lending customers. This reflected findings that during the period July 2010 to August 2013, IB did not hold an Australian financial services licence (AFS) licence which permitted the provision of margin loans. The move affected approximately 3,000 retail customers which took out a margin loan with IB during the period in question.

In June 2015, ASIC said it had requested Interactive Brokers to halt providing all over-the-counter FX services in Australia.

The latest move, however, is on a global scale and does not reflect a regulatory order.

Interactive Brokers, one of North America’s most well capitalized and stable firms moved away from retail clients last year… Or did it? In China, via the firm’s office in Admiralty, Hong Kong, retail FX is very much on the agenda!